by Harvey Williams
Contract hire and personal contract hire rates do vary considerably from one company to the next. One reason is because different companies take a different view on residual values (the value of the vehicle at the end of the term) and also as is the case with many products and services you are not always comparing like with like.
Contract hire brokers generally advertise the most competitive deals available on the Internet. It is important to bear in mind that when you replace a vehicle, if you are to take advantage of the lowest rate available, it is likely that you will be dealing with a different broker on each occasion. This is because different brokers specialise in different manufacturers and will sometimes have a special rate made available to them from a particular dealership with which they work.
Where a company has a number of vehicles in its fleet, trying to always find the lowest price advertised, each time they acquire a new vehicle, is not a very practical option. It is probably a good option for the individual looking for a vehicle on personal contract hire, providing they have the time to spend checking out the contract hire broker, they are intending to use. The company acquiring several vehicles a year would probably be better off finding a broker whose prices are keen across the board and who will keep to the delivery date and prices quoted.
Companies that regularly buy cars and deal with various brokers, usually find that things start to become very disjointed and eventually set about finding a reliable contract hire broker with whom they can develope a more permanent relationship and can also provide additional services to the client, one of the most important being a regular licence checking service. The broker will have a record of all the clients’ vehicles and will therefore be in a position to advise them of renewal dates.
For an individual or company that only acquires a vehicle every two or three years, there is no reason not to go onto the Internet and seek out the cheapest deal available. Putting the key words, contract hire, into Google will bring up somewhere in the order of 4,000,000 entries. Clearly one couldn’t hope to look at more than a fraction of those companies advertising contract hire, most people confine their search to the first page. It can also be worth checking out, contract hire and leasing, car leasing and vehicle leasing.
There are sites that act as directories for a range of contract hire and leasing brokers. Some people are quite happy using these sites others don’t like them. There is nothing essentially wrong with them, although it is important to be aware that they don’t take responsibility for, or police their advertisers. So whilst the site may be very reputable it does not necessarily follow that their advertisers are. There is certainly evidence of contract hire brokers that advertise on these sites offering prices and delivery dates that are unachievable.
When using a directory website you have to try and recognise the more reputable companies, of which there will be many. Usually their offers will be easy to understand and they will nearly always stipulate how a deal is made up, for example they will not just say contract hire over 36 months, they will show how those payments are made up the most common profile is 3 initial payments followed by 35 monthly payments. If they do not explain how the offer is structured, it is quite possible that whilst the monthly rental looks low, the initial payment could be say 2,000.
Some companies manage to show a lower monthly rental by taking six rather than three payments in advance. There is nothing wrong with a deal that takes six payments in advance, as long as overall it works out less expensive than one that takes three payments in advance. The problem is that that they rarely do.
If delivery dates quoted are better than those quoted by other companies it is really a matter of speaking to the contract hire broker and trying to gauge if you are talking to a company that is straightforward in its dealings. It can be difficult to know, but if the delivery date is much sooner than others are advertising and they also require a deposit (sometimes refundable when the car is delivered), that could be time to start worrying. There is a lot to be said for the old saying, “if something appears too good to be true, it probably is”.
This applies particularly with pricing; there are companies that quote prices on directory websites, which are considerably less than their competitors. Sometimes if you go into their website you will see the vehicle at the correct price, which may be up to 25 more than the price they showed on the directory website. On other occasions the website will also show the wrong price and it is only when the prospective customer phones that they discover that those vehicles “have all been sold” It is hoped that contract hire and leasing brokers will eventually be regulated by the FSA and these practices will stop.
Sometimes a contract hire broker lets the client down because they in turn have been let down by another broker. This tends to happen in the case of smaller brokers that are not large enough to have terms in place with the banks and finance houses, so they work through other brokers. If the broker they are using proves unreliable on delivery or price, then they will unintentionally let their own client down.
Perhaps one route to follow would be to find say three or four companies offering the lowest prices and then speak to them all; try to establish if they really can provide the vehicle at that price, on the promised delivery date and that they are not going to contact you after a few weeks and change the price, the delivery date or both. Ultimately choosing a company that inspires the most confidence, even if it is 2 or 3 a month more in terms of contract hire rental may be the best option.
